Something like this has happened before. The last time we checked in with the Yahoo-owned site, it had irreversibly deleted 1,200 of a paying user's photos for posting excessive comments on the White House Flickr stream. To console the user, Flickr offered a $25 gift card, but that was it; Yahoo customer service VP Heather Champ told the user it was impossible to retrieve old photos, implying the site had no backups.

Now comes Morgan Tepsic, a photographer and soon-to-be art student in Taipei, Taiwan who said he spent "thousands of dollars" developing the photos in his paid Flickr account. A hacker — sounds like an old flame, perhaps — somehow joined a hotmail account to his Flickr account, then nuked his photos. Tepsic aruges, persuasively, that Flickr should have done more to protect his account, at the very least emailing him to confirm the Hotmail account or at least the account termination. Instead, he says he woke up to these three emails:

1. [redacted]@hotmail.com has been added to your account!

2. Your password has been changed!

3. Your account has been terminated!

Flickr support was a nightmare; at one point Tepsic was told Flickr had no phones, an assertion quickly disproved using Flickr itself (in a photo captioned "Too many phones... at Flickr HQ"). Last weekend we sent Yahoo questions about Tepsic's case and more generally about its backup procedures. Monday a Yahoo spokesperson said the company was looking into our query; we still haven't heard back.

If the struggling internet company wants to retain its paying Flickr customers, and compete with photo-saturated Facebook, it should be more careful with customer data. And Flickr users, of course, should emphatically back up their stuff. Keeping data in "the cloud" isn't all its cracked up to be.

(Pic: Taken at Flickr HQ, by Daniel Catt)

That CEO, Mitch Fox, has announced the sale of the company's assets to a new company called 8020 Media Inc. If that sounds fishy — 8020 Media buying 8020 Media — it's because it is. The buyers include Adorama Camera, a New York-based photo chain owned by Hasidic Jews, and a group of Las Vegas investors — all represented by Brandon Calder, a Montana-based venture capitalist. An asset sale usually wipes out the company's current investors — in 8020's case, Minor Ventures, the venture-capital firm run by Halsey Minor, the founder of CNET, who has hit hard financial times himself.

8020 began life as JPG magazine and its companion website, both of which were founded by the husband-and-wife team of Derek Powazek and Heather Champ. Powazek and Cloutier cofounded 8020, which then bought JPG. Powazek was forced out in a power struggle with Cloutier in 2007. Cloutier himself left in a hurry a year later.

Meanwhile, the company hired Mitch Fox, a veteran Condé Nast ad salesman who'd just left the publisher (or been fired, depending on whom you ask), a year ago at a staggering $500,000-a-year salary — a figure Valleywag has verified firsthand through a look at the company's 2008 financials (included below). Fox vastly expanded the company, hiring expensive salespeople, launching a travel title, Everywhere, and preparing a fashion magazine. He more than doubled the company's monthly losses. Closing Everywhere did little to staunch the bleeding. 8020 ended the year with $300,000 in the bank and $3.6 million in losses, and Fox announced that the company was shutting down and putting itself up for sale.

Fox also mishandled the sale. SmugMug, a photo-sharing service, expressed interest in buying the company. But then Fox announced that a host of bidders had shown up — at which point SmugMug executives told Fox they weren't interested in a bidding war. Flickr, Yahoo's photo-sharing service, was also a rumored buyer — until Champ, who had joined Flickr as an employee, shot down the notion that anyone at Flickr or Yahoo was talking to Fox about acquiring the business.

8020's lessons? Don't hire a Condé Nast guy to run a startup, for starters. Studies have found that the best predictor of a startup's success is low CEO pay. $150,000 is the figure many cite. Above that, startups are more likely to fail, as the CEO lacks the proper motivation to turn the company into a success. Had Fox paid himself that much, the company would have doubled its cash on hand. Had he merely kept the burn rate at the level where it was when he took over, 8020 might have had another year of cash in the bank. And had he not tried to deceive potential buyers into thinking he was running an auction, 8020 might have ended up in friendlier hands.

Instead, to the end, Fox has tried to spin 8020's sale in as grandiose terms as possible, comparing its fate to the shutdown of the Rocky Mountain News. Here's the farewell email he sent:

While it's unfortunate that neither Hallmark magazine , nor the Rocky Mountain News could find buyers, we were able to swim against the tide and secure a great buyer, AND form this terrific joint partnership between these two companies with shared strategic objectives.

And now, after a hectic 47 days, hundreds, maybe thousands, of emails and countless hours on the phone and in meetings, I am delighted to report that the assets of 8020 Publishing, LLC (our official name) have been acquired by 8020 Media, Inc., a new company formed by a group of private investors, represented by Brandon Calder, for the purpose of executing on the unique vision that led to the creation of JPG Magazine, jpgmag.com and everywheremag.com. We are also pleased to announce that Adorama Camera Inc., a renowned leader in photography has reached a multi-year agreement to be JPG's Premier Community Partner and will also become minority owner of the new company.

In this difficult economic climate, business transactions take patience, finesse, intelligence and imagination, and we were lucky enough to find all these qualities in the unique group that brought this deal together. Above all, the new owners are able to see the immense promise that these properties hold to re-invent the media model and truly put the voice of the medium in the hands of its community

Adorama is a unique partner and brings an unrivaled passion for, and long-standing expertise in, the photography industry, which will be evident in the numerous exciting enhancements this relationship will bring to the JPG community.

My role, too, is changing, as I am handing the reins of the company over to my colleague, Mr. Seth Familian, who will become President and CEO of 8020 Media, Inc. As the key driver behind our digital innovation for the past year, Seth has proven to be an exceptionally capable new media leader.

Seth's plans for the business are exciting, ambitious and attainable, focusing on creative, yet practical, ways to grow both traffic and distribution, while effectively monetizing both the internet and print properties. I am sure we will all be hearing a lot about how he will develop these, and other properties on their way to becoming world class businesses.

As Vice President of Product Development for 8020 Publishing, LLC, Seth developed deep respect for the industry and the JPG community. Seth recognizes that member connection to JPG is the engine fueling its success, so member enjoyment of the site remains his core priority.

He understands how to provide opportunities that enhance members' experience, and has plans for new ways for members to share their work in many venues, which will all add to the excitement of the site's development and its value over the coming months and years. Additionally, Seth and the team are able to now reinvigorate the commitment to JPG's ‘sister' property, Everywheremag.com and look forward to developing that title while also exploring other potential opportunities for the company's business model. It's for these reasons that I feel the company is in very capable hands.

I will remain involved in the business as a member of the board of directors, and am excited to help Seth and his team in all ways possible to see 8020 Media, Inc. fulfill its promise and our dream.

In closing, I want to express my thanks to all of you who stayed close during this hectic process, and gave us your good wishes. It's always good to have friends checking in at times like this. I also want to thank Minor Ventures, especially Halsey Minor and Ron Palmeri, for believing in 8020 Publishing, LLC initially, and for working so hard to help set the enterprise off on a path that will launch it to the next level of success.

Below is the contact information for those people involved in the business now, so I guess it's time to update your address books.

See you soon I hope,

Until then, all my best

Mitch

8020 Publishing Profit

Back in the conference room, the morning meeting winds down, and attention drifts to the window of an adjoining office. On the other side, another Flickr employee smiles politely through the glass. Then he turns his back to us and lowers his pants to his ankles. It's a full and excellent moon, and our room delivers a restrained golf clap.

Had that happened in Yahoo's more restrained Sunnyvale headquarters, I'd bet a pink slip would have been delivered instead. Colin doesn't tell readers who it was, leaving us to guess. Review Flickr's staff list, and place your bets in the comments.

For Derek Powazek, 34, there are limits to what he'll share with his wife, Heather. The San Francisco couple has separate blogs; his focuses on digital media, hers on photography. Mr. Powazek says he sometimes sees her quoting his best jokes on her blog, and he tells her not to steal his material (she credits him after the fact). As for sharing one blog, the idea "never came up," he says. "It would be like saying, 'Let's share our underwear.'"

Alaina Browne and Anil Dash The foodblogger and Six Apart executive are not pregnant, though Dash has been looking a little chunky.

Heather Powazek Champ and Derek Powazek: Flickr's community manager and the famous Web designer are not pregnant.

Caterina Fake and Stewart Butterfield: Flickr's cofounders made no secrecy of Fake's pregnancy, which ended yesterday with the safe delivery of a newborn daughter.

Jennifer Granick and Brad Stone: The lawyer and New York Times reporter are expecting, and are telling people about it.

Maryam and Robert Scoble: Would you really expect Robert Scoble, whose blogger wife, Maryam, is pregnant, not to blog about the fact?

Now we all know: Ben Trott proved so irresistably hot that his wife and fellow Six Apart cofounder, Mena, found herself in a family way. Until recently, she'd been trying to keep the fact private.

To the pregnant couples: Heartfelt congratulations and best wishes. To Fake and Butterfield: Mazel tov! To Browne, Dash, and the Powazeks: Get cracking! Valleywag is going to need readers in 2025.

(Photos by Anil Dash, edyson, granick, jacksonwest, Scott Beale / Laughing Squid, and simoncast)

The contestants: Alaina Browne and Anil Dash, Heather Powazek Champ and Derek Powazek, Caterina Fake and Stewart Butterfield

Jennifer Granick and Brad Stone, Maryam and Robert Scoble, and Ben and Mena Trott

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